Purchasing Bitcoins now available with a third preferred stock option, thanks to a new strategy
MicroStrategy Announces Plans for New Preferred Stock Offering
In a significant move, MicroStrategy (Strategy) has announced its intention to issue a new preferred stock called "STRIDE" (Ticker: STRD). The company aims to raise approximately $250 million through the issuance of 2.5 million STRD shares at $100 each.
Strategy, the largest corporate holder of Bitcoin, currently holds 580,955 BTC, valued at over $60 billion. The funds raised from the issuance of STRD will be used to purchase more Bitcoin.
The company has been actively employing various capital-raising methods to increase its Bitcoin holdings. Goldman Sachs has entered into a partnership with Strategy to support the sale of the new preferred share STRD. Further "at-the-market offerings" of preferred shares increase this value, as preferred shares have no maturity.
Interested investors can express their interest in STRD through the financial services provider Fidelity. The pricing of STRD is scheduled for June 5, 2025.
The new preferred stock, STRD, resembles STRF as it pays a 10% dividend and has no conversion option. However, it is junior to STRK and STRF in the capital structure and does not have a claim that unpaid dividends will be paid later.
If market interest rates fall and/or investors demand a lower risk premium on Strategy's preferred shares, this is reflected in rising STRK, STRF, and STRD prices. It is worth noting that STRK and STRF have been filed with the U.S. Securities and Exchange Commission (SEC) for further market sales - up to $21 billion for STRK and up to $2.1 billion for STRF.
Strategy's mNAV, calculated as (Market capitalization - Liabilities) / Value of held Bitcoin, is currently slightly below 2, meaning that the "Enterprise Value" is nearly double the Bitcoin balance. The acquisition cost of Strategy's Bitcoin holdings is approximately $40 billion.
However, if Strategy finds it difficult to raise equity capital in the future due to a low mNAV, while simultaneously increasing its liabilities through further debt financing, it could lead to Strategy selling bitcoins and potentially closing its doors. The annual payment obligations for Strategy, including interest on convertible bonds and dividends on all preferred shares, currently amount to $235 million.
It is important to note that this article provides factual information and does not contain any opinions or unrelated details. The reader is advised to conduct their own research or consult with a financial advisor before making any investment decisions.
